The UB plant produces McVitie's and retailer-branded biscuits.

UB is proposing to close the factory at the end of 2004.

The firm says the closure is proposed because of the need to move production to sites elsewhere in the country which are bigger and have a greater capacity for future growth.

Market leading

A consultation programme with staff and unions is now being started, but the firm says it expects the job losses to go ahead.

The company's snack factory and distribution centre which are also based in the town will continue to operate.

Chris Aitken, Biscuits Operations Director said: "It in no way reflects the commitment and quality of our employees at the Ashby biscuit site.

Recognise responsibility

"Looking at the business as a whole, we need to make sure we have the right infrastructure to continue to make market leading products, continue to be profitable and safeguard the jobs of our 7,000 employees across the UK.

"Of course we will be discussing plans with both unions and employees during the collective consultation process that we will now enter.

"As a company, we recognise our responsibilities to our employees, and we will do all we can to mitigate the impact of these proposals upon them."

It is believed up to 500 of the affected workers could be offered the chance to relocate.